Eike Batista Arrested on Suspicion of Crypto Money Laundering

Brazilian businessman Eike Batista has been taken into custody by federal police on suspicion of money laundering, which was supposedly carried out on behalf of his girlfriend.

The news about Batista’s arrest was first reported by Cointelegraph Brazil yesterday. Per the account, prosecutors found notes indicating that he had engaged in Bitcoin trading on behalf of his wife. The Federal Prosecutor wrote that while his wife, Mrs. Flava, isn’t being investigated, it is possible that Eike was using her name and account in a bid to conceal the proceeds and products of his crimes.

Cointelegraph Brazil reported that Batista was arrested in the course of Operation Midas Street, a raid operation that was backed by Eduardo Plass, owner of the TAG Bank.

Prosecutors alleged that Batista and one of his employees (name Luiz Andrade Correia) used one of Plass’s companies to perform stock trading activities in both the domestic and international markets, with the intent of manipulating the values of some corporate assets. Both men were also alleged to have illegally traded on the Toronto Stock Exchange and committed fraud concerning some other stock trading portfolios as well.

The Attorney General’s Office believed that Correia and Batista made illegal trades on some underground stock exchanges. The Brazilian Ministry of the Public corroborated this claim, estimating that up to $800 million was illegally traded by the men. Batista made his wealth thanks to his dealings in oil, energy, and mining. He was previously listed at the seventh wealthiest person in the world, even earning the title of the wealthiest man in Brazil back in 2012 with a reported peak net worth of about $30 billion.

However, things turned on its head soon after, as legal and business troubles eroded his net worth. His flagship oil company OGX (now OGPar) failed to meet production and financial targets consistently, and the company eventually filed for bankruptcy in October 2013. A month later, OSX, his shipping company, made the same move.

Per a Forbes article, both of these corporations had total debts amounting to the tune of $7.1 billion at the time.  However, while this would not be the first legal quandary that Batistas is finding himself in, it could be significant, as it adds extra strain on an already troubled relationship between Brazilian authorities and its crypto community.

Earlier this month, Cointelegraph Brazil reported that the Department of Federal Revenue (RFB), Brazil’s tax authority, has compelled every citizen to report their crypto transactions.

Per a separate report from national news agency Agencia Brasil, the requirement applies to individuals, brokerages, and companies, and it covers every form of crypto-related activity, including sales, purchases, donations, barters, and others.

The measure requires people and entities to provide monthly reports on their crypto activities, on the month following the one when the activities took place. Primarily, information for August should be sent on the last day of September.

Per Cointelegraph Brazil, exchanges will need to inform the tax authority of all operations, regardless of their value. However, entities which use foreign cryptocurrency exchanges or make peer to peer crypto transactions will only need to report their Activities if the monthly transactions exceed 20,000 reais (about $7,800).

Those who fail to report their transactions will face fines ranging from 100 to 500 reais ($25 to $130). The RFB is also permitted to charge between 1.5 to 3 percent of the unreported transaction as a penalty.